Debt consolidation has become a leading facility chosen by debtors to ease their financial burden which arises as a result of 4 or 5 different loans. On the biggest advantages of this option is that it improves credit scores of clients which is beneficial for them in the long run. This happens as a result of a single obligation as opposed to multiple ones for mortgage, consumer debt, car loans and many others.
Another advantage of debt consolidation is that the interest rate charged on the loan is tax deductible, whereas the interest rate applied on credit card debt is not tax deductible. This implies that tax is not charged on the entire income rather the interest can be deducted from the income before the relevant tax rate is applied.
Debt consolidation also allows for favorable loan terms because the new loan taken for consolidation can be customized to suit the debtor’s lifestyle and income level.
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